Fundamental analysis Gold for 02.04.2024

02.04.2024 13:59
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Gold price (XAU/USD) continues to allure buyers, marking its sixth consecutive day of gains on Tuesday, hovering near the all-time peak of $2,260-$2,265 established the prior day. The surge is partly attributed to upbeat US manufacturing data released on Monday, which raised skepticism about the Federal Reserve's plan to cut interest rates thrice this year. This uncertainty, coupled with looming geopolitical tensions in the Middle East, dampens investors' risk appetite, bolstering demand for the safe-haven precious metal.

 The Institute for Supply Management's report indicating expansion in the US manufacturing sector for March, following 16 months of contraction, prompted investors to reconsider their expectations of a June rate cut by the Federal Reserve. Consequently, yields on the two-year and ten-year US government bonds surged to a two-week high, bolstering the US Dollar and exerting pressure on gold prices.

 Simultaneously, escalating geopolitical tensions, exemplified by Israeli airstrikes on the Iranian embassy in Syria, further accentuate the appeal of safe-haven assets like XAU/USD. Additionally, the US PCE Price Index released on Friday, indicating moderate inflation in February, keeps hopes of a Fed rate cut alive, limiting downside risks for gold.

 Market sentiment suggests a total projected rate cut of 69 basis points for 2024, slightly lower than the Fed's anticipated 75 bps cut. This expectation sustains elevated US Treasury bond yields, supporting the USD, which might constrain further gains for gold. Consequently, bullish investors may opt for near-term consolidation amidst overextended conditions on the daily chart, awaiting US macroeconomic data releases and speeches by influential FOMC members.

 Technical analysis and scenarios:

Given the current price the Alligator indicator suggests that the market is in an uptrend

as its hungry mouth (blue line) is located below the lips and teeth (green and red lines). However,

the Awesome Oscillator (AO) and Accelerator Oscillator (AC) in the green zone near the zero level

indicate a strong buy signal, confirming the initial upside signal from the Alligator.

Main scenario (BUY)

Recommended entry level: 2255.00

Take profit: 2275.00

Stop loss: 2235.00

Alternative scenario (SELL)

Recommended entry level: 2235.00

Take profit: 2200.00

Stop loss: 2255.00